European Union chief negotiator Michel Barnier said Thursday that talks on the Brexit bill are deadlocked, and that he will advise the European Union that there has not been sufficient progress to move talks on to the next phase.
That downbeat assessment sent the pound sinking against the euro.
Barnier told reporters in Brussels on Thursday that on the issue of the financial settlement, there have "been no negotiations".
Nonetheless, he offered hope: "I am still convinced that, with political will, decisive progress is within reach in the coming two months".
Barnier told a news conference that negotiators "worked in a constructive spirit" and clarified points, but were unable to make "any great steps forward".
The amount of money the United Kingdom will pay to meet financial commitments it made while still a member has been one of the main stumbling blocks in the negotiations.
Davis announced a "streamlined" new system for the 3 million European Union citizens in Britain to claim residence rights, answering European Union concerns, and said he expected good further progress on other issues.
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"Regarding that question we are at an impasse, which is very worrying for thousands of projects everywhere in Europe and also worrying for those who contribute", Reuters reports.
The Frenchman said there was no chance of "sufficient progress" on the key divorce issues being agreed this month, but appeared optimistic things will have moved on by December.
Deadlock was the word of the day as the fifth round of Brexit talks ended with no new progress at all.
"That goes to show that, even though we think the Commission is absolutely in charge and can make all the decisions, the power to move on really lies in the member states".
Mr Barnier made clear that despite new momentum from Mrs May's concessions in a speech at Florence last month, British proposals still failed the "sufficient progress" test, notably on tens of billions of euro the European Union says London owes.